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SA Express takes aim at Africa

Article By: Inati Ntshanga

Fri, 04 Jan 2013 8:48 AM

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AFP

Aviation is an important enabler of growth of national, regional and international trade and tourism — especially in Africa, which is still grappling with problems of underdeveloped infrastructure.

Underdeveloped road and rail networks in huge parts of the continent means that the airline industry gains even greater significance at a time of a fast-growing middle-class that appears more than ever before committed to the idea of a more integrated continent.

Aviation contributed $67.8bn to Africa’s gross domestic product, if aviation-related tourism is included, according to data from the International Air Transport Association (Iata), the global industry group. Passenger traffic in economy class grew 18% in 2011 while business class traffic jumped 21%.

Africa itself contributed a paltry 3% of the global passenger figures, but therein lies a great opportunity for African airlines such as the regional feeder SA Express, which I head, and South African Airways (SAA).

To grow our African dream, in which we will seek to deliver a great, efficient flying experience for our customers, we are working with our shareholder representative, the Department of Public Enterprises, to establish hubs in East and West Africa.

Regional hubs are important if we want to end some of the logistical nightmares Africans go through flying to some destinations on the continent — such as being routed from Africa to Europe for connecting flights to African destinations (such as Freetown or even Tunis). Public Enterprises Minister Malusi Gigaba discussed the hub question when he visited Ghana last October. Similar discussions are ongoing in East Africa.

Successful African airlines have embraced the hub idea. Ethiopian Airlines, for instance, has established a hub in Gabon and is considering one in Zambia.

In addition to developing the hubs, we are looking to establish or enhance our routes to Mozambique, Ghana, Tanzania and Angola — all high-value destinations in terms of both trade and tourism. Together with the department, we are looking at the best strategies to tap into these markets, focusing on a good return to the shareholder.

It may well be argued that we are a small airline that has had some problems in the past. That may be so, but we are also proving to be resilient and keen to run efficiently and do everything to stick to the highest standards of governance.

In the year to November, for instance, we made a modest profit of R8.9m. This is a tiny number but it is very positive when the context is one of negative financials for the preceding two years. Crucially for SA Express, we have also identified cost savings in the operations that enabled us to save R80m in the same period.

We are heading in the right direction. We have spent a lot of time and energy in the past few months working to streamline internal processes to ensure there are no lapses. We cannot have another situation where our financials are not reported perfectly.

To appreciate that we are making small but important steps, one has to look at the recent financials of some global players. Qantas, Air France-KLM and even Kenya Airways here in Africa have been negative. Financial stress has led to the folding of some small airlines in recent weeks and months, including Kenya’s Jetlink and Air Nigeria.

Our fuel costs, at 22%, are well below the average 30% seen in South Africa and that’s partly because of our fleet of medium-range Bombardier Q400 aircraft, acquired only last year. They are both efficient and low-maintenance.

Our labour costs are high, at 23%, but we are working to streamline these. Our staff remain a great team determined to deliver value to our customers and to the people of South Africa, the ultimate shareholders of SA Express.

Let me return to Africa, where I started. We need to work together to build the infrastructure necessary to service the continent. For example, Kenya does not yet have a world-class airport and that’s hurting regional travel in East Africa. We also need to reach parts of the continent still virtually impossible to fly to.

We are a continent of a billion people. There is great potential to improve and grow as an airline and as an industry.

We are determined to play our role. The fact that this month Bombardier appointed SA Express as its only approved service facility in Africa shows that many in the industry share this determination and vision.